Issues and Challenges Faced by FedEx in Logistics

This article discusses the issues and challenges faced by FedEx in the logistics industry. It covers topics such as fuel costs, business improvement processes, customer service, government regulations, and environmental issues. The article also provides insights into how these challenges can be overcome.

Global logistics and supply
chain management
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Table of contents
REFERENCES................................................................................................................................6
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Company description
FedEx is an American MNC which is headquartered in Memphis, Tennessee, US. It is a
public limited company that operate in logistics industry. It was founded by Frederick w smith in
1971. The company name Fedex is abbreviation of its air division, federal express that was used
till 2000. In present times, FedEx is known for its best delivery services through air that is
federal express. There are many other flagship as well of company such as fedex supply chain,
freight and other services (Govindan, and Shukla, 2018). The firm is also a major client of US
government and also provide services to US postal services via its fedex smart post. FedEx
operate worldwide and offer courier and logistics services. There are more than 600, 000
employees working in firm. Along with that, operating income in 2019 was $ 4466 billion and
the total asset owned by firm is worth $54403 billion. FedEx's importance in both the US and the
world have made it a common topic in popular culture.
Issues and challenges faced by FedEx in logistics
As said by Tu, (2018), logistics and supply chain industry are most complex sector to
operate in. This is because the sector operates at worldwide. So, there is a lot of complexity and
issues which is faced by companies. The issues are related to costs, safety of products, legal,
tariff, etc. Apart from it, the most important service which is required to be delivered by
organisation in logistics is timely delivery of goods. Also, it requires to maintain safety of goods
as well. However, with change in technology there are certain issues that is being faced by
organisation in logistics. They are highly impacting on service delivery and growth of company.
Similarly, FedEx is also facing several issues which is explained as :
Fuel cost- this is common challenge that is faced by FedEx in logistics industry. In this the
contribution of cutting fuel cost is challenging. It is expected that high fuel prices is going to
result in high transport cost. Hence, it will led to rise fuel surcharge. Thus, this will directly
effect on customers or third parties. There will be increase in overall cost of transportation.
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Business improvement process- This is also an issue faced by FedEx. Due to technology
advancement new software and applications are emerging. They are being used to improve
business process. It is an issue of logistics sector to make changes in their business process.
However, grabbing of these new opportunities is good but implementing the changes can be
difficult and challenging tasks.
Improve customer service- Now, customers want transparency in delivery system. The package
is tracked with social network. Besides, customer expectations have improved and it has led to
paying for fast shipping has declined. There ae only 64% of consumers who want to pay for less
than 2 day shipping (Yu, and Huang, 2017).
Economy – As fuel prices are increasing so there is more crisis on rise in inflation demand in
economies of different nations. Thus, due to that industry is then pressurize by government to
increase regulatory compliance issues, decrease in demand, etc. With that they are not able to
operate freely and it also result in decrease in their revenue.
Government regulations- As FedEx operate at global level so they have to follow rules and
regulations of various nations. However, there is continuous change in regulation and
compliance by government which makes it difficult for company to follow. Moreover, there are
compliance at national state and local level so these all has to be followed in delivering services
to customers and in market.
Environmental issues- With rise in pollution this is major issue that is being faced by FedEx. in
this many government have imposed strict restrictions and rules that needs to be followed by
firm. They are forcing companies to incur more on CSR and follow compliance codes.
Therefore, it is leading to decline in profits of firm (Lai, Sun, H. and Ren, 2018).
In the view of Zijm, and Regattieri, (2019), the issues in logistics industry is rising to a
great extent. Due to that it is difficult for firms to operate in market in free way. There are a lot
of compliance and rules to be followed. However, in every market FedEx have to work in
different way. Apart from it, despite making improvement in process and implementing
technology the compliance are not effectively followed. In logistics sector the main issue is
emission and rise in pollution. Hence, government has formed certain compliance that restricts
flexible operations of firm. Another thing is the capacity of logistics has increased. Thus, FedEx
is not able to handle and manage the delivery of services in effective way. If they do then the
cost of delivering goods is high and profits are low. In addition to it, the cost of implementation
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of technology is high. Also, it requires an expert and other person to maintain technology.
Besides that, it also need advance IT infrastructure for technology to install it. Hence, FedEx is
not able to maintain technology as huge cost is incurred in it.
But on the other hand Tu, (2018), said that issues can be easily handled and overcome.
This requires an effective and proper planning. Apart from it, there is need to form flexible laws
and regulations so that it can be modified as per the government compliance. This will make it
easy for firm to coordinate with government and work in effective way. Besides that, FedEx can
operate in free market. The use of technology will also enable in reducing emission and
pollution. With that there will be improvement in process and operations of organisation.
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REFERENCES
Books and journals
Govindan, K.. and Shukla, N., 2018. Big data analytics and application for logistics and supply
chain management.
Tu, M., 2018. An exploratory study of Internet of Things (IoT) adoption intention in logistics
and supply chain management. The International Journal of Logistics Management.
Yu, Y., and Huang, G.Q., 2017. E-commerce logistics in supply chain management. Industrial
Management & Data Systems.
Lai, Y., Sun, H. and Ren, J., 2018. Understanding the determinants of big data analytics (BDA)
adoption in logistics and supply chain management. The International Journal of Logistics
Management.
Zijm, H.. and Regattieri, A., 2019. Operations, logistics and supply chain management:
definitions and objectives. In Operations, Logistics and Supply Chain Management (pp.
27-42). Springer, Cham.
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